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SAP Exec Jibes Oracle, Touts Success in Industry Verticals

SAP CEO Bill McDermott on Friday offered a take on Oracle's DoJ troubles, the company's target markets for CRM and an overview of what's needed for a successful enterprise.

PHILADELPHIA—The chief executive officer of SAP America Inc. gave business school students a dose of his advice on entering the technology market and also took some time to joke about the status of a key competitor.

Bill McDermott, CEO of SAP AGs U.S. operations spoke as a keynoter at the University of Pennsylvanias Wharton Schools Technology Conference 2004 Friday.

Between giving MBA candidates a look at the realities of the high-tech business world, McDermott took a jab at Oracle Corp. chairman Larry Ellison and his companys attempt to acquire Peoplesoft Inc.

"I need to get Mr. Ellison on all my holiday card lists and thank him for disrupting the marketplace," McDermott said of the so far failed attempt by Oracle to acquire Peoplesoft.

"Besides the federal government has stepped in and is against that deal, so I dont think it is as realistic a possibility today as it was a few days ago," he said.

"The bottom line is what we do is unique," McDermott said. "We are the number one application software company and we are deeply embedded into companies on a global basis."

Indeed, "Oracles move was to try to get into the applications business because theyre a poor database company," he said. "Him [Ellison] not getting Peoplesoft JD Edwards runs the risk of them being irrelevant in the applications space. But we wish them well," McDermott said to a round of laughter from the crowd.

What makes SAP so appealing is that "today companies are interested in CRM systems, core financials, complying with Sarbanes Oxley, supply chain management and how it relates to their overall business," he said.

"And the big deal is theyve got a big budget going into legacy applications, as much as 70 percent. So theyre looking for enabling technology like our NetWeaver to integrate all this stuff and drop their costs. They want you to show them how to re-invent their companies."

McDermott then told the audience five characteristics of growing companies: they have aggressive goals, they are opportunistic, they integrate partners, they focus on continuous improvement, and they have a culture geared toward growth.

Yet, "the root cause of all that success come down to leadership," McDermott said. He exhorted the group to incite "operation innovation."

McDermott observed that CRM companies are not growing because "if youre a point product you cant have the overall discussion, you can only talk about CRM. So where were going with CRM, were going to be talking about business processes. So integrated business processes with a market leader are becoming much more important than a company with CRM."

McDermott cited some specific hot-button growth areas.

"We market to 23 industry verticals and the big breakthrough is public service," he said. "Things like homeland security and citizen-relationship management are going to be very important." Indeed, business-scenario applications are becoming also, he said.

In addition, McDermott highlighted the importance of alliances.

"Companies that have alliances as a stated goal make the ones experimenting with alliances look like amateur night at the Philly Center," he said. McDermott added that alliances should be low risk and successful.

Meanwhile, McDermott said that to accelerate leadership and build a great company you have to focus on customer satisfaction and knowing what customers want.

"We constantly re-invest back into the company," he said. "We have become much more services oriented. You have to educate and train your people and then you have to support the customer. Fundamentally you have to have leadership and you have to have people—people who understand the customer and who focus on the customer."

That is what sets SAP apart, he added.

"In relation to the competitive environment, the reason the market shares of Oracle, Siebel, Peoplesoft and others have dropped in relation to SAP is customers dont want a database company messing with applications, and they dont want a best-of-breed company fiddling with an integrated system." Instead they want a full spectrum applications provider, McDermott said.

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